Common use of Potential Reduction Clause in Contracts

Potential Reduction. Notwithstanding the foregoing, if at the end of the first seventeen (17) months of the Lease Term (a) no Event of Default then exists, and (b) there has been no monetary Event of Default during such seventeen (17)-month period, then, upon the written request of Tenant, the face amount of the Letter of Credit may be reduced to $280,000.00, and immediately upon delivery to Landlord of a satisfactory replacement Letter of Credit in such reduced face amount but meeting all of the other requirements of this Exhibit “M,” the then existing Letter of Credit will be deemed canceled and shall be returned to Tenant. Furthermore, if at the end of the first twenty-nine (29) months of the Lease Term (a) no Event of Default then exists, and (b) there has been no monetary Event of Default during such twenty-nine (29)-month period, then, upon the written request of Tenant, the face amount of the Letter of Credit may be reduced to $210,000.00, and immediately upon delivery to Landlord of a satisfactory replacement Letter of Credit in such reduced face amount but meeting all of the other requirements of this Exhibit “M,” the then existing Letter of Credit will be deemed canceled and shall be returned to Tenant. Furthermore, if at the end of the first forty-one (41) months of the Lease Term (a) no Event of Default then exists, and (b) there has been no monetary Event of Default during such forty-one (41)-month period, then, upon the written request of Tenant, the face amount of the Letter of Credit may be reduced to $140,000.00, and immediately upon delivery to Landlord of a satisfactory replacement Letter of Credit in such reduced face amount but meeting all of the other requirements of this Exhibit “M,” the then existing Letter of Credit will be deemed canceled and shall be returned to Tenant. Furthermore, if at the end of the first fifty-three (53) months of the Lease Term (a) no Event of Default then exists and (b) there has been no monetary Event of Default during such fifty-three (53)-month period, then, upon the written request of Tenant, the face amount of the Letter of Credit may be reduced to $70,000.00, and immediately upon delivery to Landlord of a satisfactory replacement Letter of Credit in such reduced face amount but meeting all of the other requirements of this Exhibit “M,” the then existing Letter of Credit will be deemed canceled and shall be returned to Tenant. For purposes of this Section 9, “monetary Event of Default” shall mean late payment of Rent. IRREVOCABLE STANDBY LETTER DATE OF ISSUANCE: OF CREDIT NO: EXPIRATION DATE: BENEFICIARY: APPLICANT: (LANDLORD) (TENANT) AS THE ISSUING BANK (“ISSUER”), WE HEREBY ESTABLISH THIS IRREVOCABLE STANDBY LETTER OF CREDIT NO. IN FAVOR OF THE ABOVE-NAMED BENEFICIARY (“BENEFICIARY”) FOR THE ACCOUNT OF THE ABOVE-NAMED APPLICANT (“APPLICANT”) IN THE AMOUNT OF USD $ ( U.S. DOLLARS). BENEFICIARY MAY DRAW ALL OR ANY PORTION OF THIS LETTER OF CREDIT AT ANY TIME AND FROM TIME TO TIME AND ISSUER WILL MAKE FUNDS IMMEDIATELY AVAILABLE TO BENEFICIARY UPON PRESENTATION OF BENEFICIARY’S DRAFT(S) AT SIGHT IN SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT “A”) (“SIGHT DRAFT”), DRAWN ON ISSUER AND ACCOMPANIED BY THIS LETTER OF CREDIT. ALL SIGHT DRAFT(S) MUST BE SIGNED AND ENDORSED ON BEHALF OF BENEFICIARY AND SIGNATOR MUST INDICATE HIS OR HER TITLE OR OTHER OFFICIAL CAPACITY. NO OTHER DOCUMENTS WILL BE REQUIRED TO BE PRESENTED. THE ISSUER WILL EFFECT PAYMENT UNDER THIS LETTER OF CREDIT WITHIN 24 HOURS AFTER PRESENTMENT OF THE SIGHT DRAFT(S). ISSUER WILL HONOR ANY SIGHT DRAFT(S) PRESENTED IN SUBSTANTIAL COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT AT THE ISSUER’S LETTERHEAD OFFICE, THE OFFICE LOCATED AT OR ANY OTHER FULL SERVICE OFFICE OF THE ISSUER ON OR BEFORE THE ABOVE STATED EXPIRATION DATE, AS SUCH EXPIRATION DATE MAY BE EXTENDED HEREUNDER. PARTIAL AND MULTIPLE DRAWS AND PRESENTATIONS ARE PERMITTED ON ANY NUMBER OF OCCASIONS. FOLLOWING ANY PARTIAL DRAW, ISSUER WILL ENDORSE THIS LETTER OF CREDIT AND RETURN THE ORIGINAL TO BENEFICIARY. ISSUER ACKNOWLEDGES THAT THIS LETTER OF CREDIT IS ISSUED PURSUANT TO THE PROVISIONS OF THAT CERTAIN OFFICE LEASE AGREEMENT BETWEEN THE BENEFICIARY AND THE APPLICANT FOR SPACE LOCATED AT (“LEASE”). NOTWITHSTANDING ANY REFERENCE IN THIS LETTER OF CREDIT TO THIS LEASE OR ANY OTHER DOCUMENTS, INSTRUMENTS OR AGREEMENTS, OR REFERENCES IN THIS LEASE OR ANY OTHER DOCUMENTS, INSTRUMENTS OR AGREEMENTS TO THIS LETTER OF CREDIT, THIS LETTER OF CREDIT CONTAINS THE ENTIRE AGREEMENT BETWEEN BENEFICIARY AND ISSUER RELATING TO THE OBLIGATIONS OF ISSUER HEREUNDER. THIS LETTER OF CREDIT WILL BE AUTOMATICALLY EXTENDED EACH YEAR WITHOUT AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE EXPIRATION DATE HEREOF, AS EXTENDED, UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE EXPIRATION DATE, ISSUER NOTIFIES BENEFICIARY BY REGISTERED MAIL THAT IT ELECTS NOT TO EXTEND THIS LETTER OF CREDIT FOR SUCH ADDITIONAL PERIOD. NOTICE OF NON-EXTENSION WILL BE GIVEN BY ISSUER TO BENEFICIARY AT BENEFICIARY’S ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS AS BENEFICIARY MAY DESIGNATE TO ISSUER IN WRITING AT ISSUER’S LETTERHEAD ADDRESS THIS LETTER OF CREDIT IS FREELY TRANSFERABLE IN WHOLE OR IN PART, AND THE NUMBER OF TRANSFERS IS UNLIMITED. ISSUER AGREES THAT IT WILL EFFECT ANY TRANSFERS IMMEDIATELY UPON PRESENTATION TO ISSUER THIS LETTER OF CREDIT AND A WRITTEN TRANSFER REQUEST SUBSTANTIALLY IN THE FORM OF THE COMPLETED TRANSFER FORM ATTACHED HERETO AS EXHIBIT “B.” SUCH TRANSFER WILL BE EFFECTED AT NO COST TO BENEFICIARY. ANY TRANSFER FEES ASSESSED BY ISSUER WILL BE PAYABLE SOLELY BY APPLICANT, AND THE PAYMENT OF ANY TRANSFER FEES WILL NOT BE A CONDITION TO THE VALIDITY OR EFFECTIVENESS OF THE TRANSFER OR THIS LETTER OF CREDIT. ISSUER WAIVES ANY RIGHTS IT MAY HAVE, AT LAW OR OTHERWISE, TO SUBROGATE TO ANY CLAIMS BENEFICIARY MAY HAVE AGAINST APPLICANT OR APPLICANT MAY HAVE AGAINST BENEFICIARY. EXCEPT AS OTHERWISE EXPRESSLY MODIFIED HEREIN, THIS STANDBY LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES 1998, PUBLISHED BY THE INTERNATIONAL CHAMBER OF COMMERCE. ISSUER: By: Its: $ At sight, pay to the order of [Name of Beneficiary to be inserted], the amount of USD $ ( and 00/100ths U.S. Dollars). Drawn under [Name of Issuer to be inserted] Standby Letter of Credit No. . Dated: , 20 [Name of Beneficiary to be inserted] By: Its Authorized Representative and [Title or Other Official Capacity to be inserted] To: [Name and Address of Issuer to be inserted] CREDIT NO: CURRENT BENEFICIARY: APPLICANT:

Potential Reduction. Notwithstanding the foregoing, if at the end of the first seventeen (17) months of the Lease Term (a) no Event of Default then exists, and (b) there has been no monetary Event of Default during such seventeen (17)-month period, then, upon the written request of Tenant, the face amount of the Letter of Credit may be reduced to $280,000.00, and immediately upon delivery to Landlord of a satisfactory replacement Letter of Credit in such reduced face amount but meeting all of the other requirements of this Exhibit “M,” the then existing Letter of Credit will be deemed canceled and shall be returned to Tenant. Furthermore, if at the end of the first twenty-nine (29) months of the Lease Term (a) no Event of Default then exists, and (b) there has been no monetary Event of Default during such twenty-nine (29)-month period, then, upon the written request of Tenant, the face amount of the Letter of Credit may be reduced to $210,000.00, and immediately upon delivery to Landlord of a satisfactory replacement Letter of Credit in such reduced face amount but meeting all of the other requirements of this Exhibit “M,” the then existing Letter of Credit will be deemed canceled and shall be returned to Tenant. Furthermore, if at the end of the first forty-one (41) months of the Lease Term (a) no Event of Default then exists, and (b) there has been no monetary Event of Default during such forty-one (41)-month period, then, upon the written request of Tenant, the face amount of the Letter of Credit may be reduced to $140,000.00, and immediately upon delivery to Landlord of a satisfactory replacement Letter of Credit in such reduced face amount but meeting all of the other requirements of this Exhibit “M,” the then existing Letter of Credit will be deemed canceled and shall be returned to Tenant. Furthermore, if at the end of the first fifty-three (53) months of the Lease Term (a) no Event of Default then exists and (b) there has been no monetary Event of Default during such fifty-three (53)-month period, then, upon the written request of Tenant, the face amount of the Letter of Credit may be reduced to $70,000.00, and immediately upon delivery to Landlord of a satisfactory replacement Letter of Credit in such reduced face amount but meeting all of the other requirements of this Exhibit “M,” the then existing Letter of Credit will be deemed canceled and shall be returned to Tenant. For purposes of this Section 9, “monetary Event of Default” shall mean late payment of Rent. SCHEDULE 1 TO EXHIBIT “M” OF THE LEASE FORM OF LETTER OF CREDIT [LETTERHEAD OF ISSUING BANK] IRREVOCABLE STANDBY LETTER DATE OF ISSUANCE: OF CREDIT NO: EXPIRATION DATE: BENEFICIARY: APPLICANT: (LANDLORD) (TENANT) AS THE ISSUING BANK (“ISSUER”), WE HEREBY ESTABLISH THIS IRREVOCABLE STANDBY LETTER OF CREDIT NO. IN FAVOR OF THE ABOVE-NAMED BENEFICIARY (“BENEFICIARY”) FOR THE ACCOUNT OF THE ABOVE-NAMED APPLICANT (“APPLICANT”) IN THE AMOUNT OF USD $ ( U.S. DOLLARS). BENEFICIARY MAY DRAW ALL OR ANY PORTION OF THIS LETTER OF CREDIT AT ANY TIME AND FROM TIME TO TIME AND ISSUER WILL MAKE FUNDS IMMEDIATELY AVAILABLE TO BENEFICIARY UPON PRESENTATION OF BENEFICIARY’S DRAFT(S) AT SIGHT IN SUBSTANTIALLY THE FORM ATTACHED HERETO AS EXHIBIT “A”) (“SIGHT DRAFT”), DRAWN ON ISSUER AND ACCOMPANIED BY THIS LETTER OF CREDIT. ALL SIGHT DRAFT(S) MUST BE SIGNED AND ENDORSED ON BEHALF OF BENEFICIARY AND SIGNATOR MUST INDICATE HIS OR HER TITLE OR OTHER OFFICIAL CAPACITY. NO OTHER DOCUMENTS WILL BE REQUIRED TO BE PRESENTED. THE ISSUER WILL EFFECT PAYMENT UNDER THIS LETTER OF CREDIT WITHIN 24 HOURS AFTER PRESENTMENT OF THE SIGHT DRAFT(S). ISSUER WILL HONOR ANY SIGHT DRAFT(S) PRESENTED IN SUBSTANTIAL COMPLIANCE WITH THE TERMS OF THIS LETTER OF CREDIT AT THE ISSUER’S LETTERHEAD OFFICE, THE OFFICE LOCATED AT OR ANY OTHER FULL SERVICE OFFICE OF THE ISSUER ON OR BEFORE THE ABOVE STATED EXPIRATION DATE, AS SUCH EXPIRATION DATE MAY BE EXTENDED HEREUNDER. PARTIAL AND MULTIPLE DRAWS AND PRESENTATIONS ARE PERMITTED ON ANY NUMBER OF OCCASIONS. FOLLOWING ANY PARTIAL DRAW, ISSUER WILL ENDORSE THIS LETTER OF CREDIT AND RETURN THE ORIGINAL TO BENEFICIARY. ISSUER ACKNOWLEDGES THAT THIS LETTER OF CREDIT IS ISSUED PURSUANT TO THE PROVISIONS OF THAT CERTAIN OFFICE LEASE AGREEMENT BETWEEN THE BENEFICIARY AND THE APPLICANT FOR SPACE LOCATED AT (“LEASE”). NOTWITHSTANDING ANY REFERENCE IN THIS LETTER OF CREDIT TO THIS LEASE OR ANY OTHER DOCUMENTS, INSTRUMENTS OR AGREEMENTS, OR REFERENCES IN THIS LEASE OR ANY OTHER DOCUMENTS, INSTRUMENTS OR AGREEMENTS TO THIS LETTER OF CREDIT, THIS LETTER OF CREDIT CONTAINS THE ENTIRE AGREEMENT BETWEEN BENEFICIARY AND ISSUER RELATING TO THE OBLIGATIONS OF ISSUER HEREUNDER. THIS LETTER OF CREDIT WILL BE AUTOMATICALLY EXTENDED EACH YEAR WITHOUT AMENDMENT FOR A PERIOD OF ONE YEAR FROM THE EXPIRATION DATE HEREOF, AS EXTENDED, UNLESS AT LEAST SIXTY (60) DAYS PRIOR TO THE EXPIRATION DATE, ISSUER NOTIFIES BENEFICIARY BY REGISTERED MAIL THAT IT ELECTS NOT TO EXTEND THIS LETTER OF CREDIT FOR SUCH ADDITIONAL PERIOD. NOTICE OF NON-EXTENSION WILL BE GIVEN BY ISSUER TO BENEFICIARY AT BENEFICIARY’S ADDRESS SET FORTH HEREIN OR AT SUCH OTHER ADDRESS AS BENEFICIARY MAY DESIGNATE TO ISSUER IN WRITING AT ISSUER’S LETTERHEAD ADDRESS THIS LETTER OF CREDIT IS FREELY TRANSFERABLE IN WHOLE OR IN PART, AND THE NUMBER OF TRANSFERS IS UNLIMITED. ISSUER AGREES THAT IT WILL EFFECT ANY TRANSFERS IMMEDIATELY UPON PRESENTATION TO ISSUER THIS LETTER OF CREDIT AND A WRITTEN TRANSFER REQUEST SUBSTANTIALLY IN THE FORM OF THE COMPLETED TRANSFER FORM ATTACHED HERETO AS EXHIBIT “B.” SUCH TRANSFER WILL BE EFFECTED AT NO COST TO BENEFICIARY. ANY TRANSFER FEES ASSESSED BY ISSUER WILL BE PAYABLE SOLELY BY APPLICANT, AND THE PAYMENT OF ANY TRANSFER FEES WILL NOT BE A CONDITION TO THE VALIDITY OR EFFECTIVENESS OF THE TRANSFER OR THIS LETTER OF CREDIT. ISSUER WAIVES ANY RIGHTS IT MAY HAVE, AT LAW OR OTHERWISE, TO SUBROGATE TO ANY CLAIMS BENEFICIARY MAY HAVE AGAINST APPLICANT OR APPLICANT MAY HAVE AGAINST BENEFICIARY. EXCEPT AS OTHERWISE EXPRESSLY MODIFIED HEREIN, THIS STANDBY LETTER OF CREDIT IS SUBJECT TO THE INTERNATIONAL STANDBY PRACTICES 1998, PUBLISHED BY THE INTERNATIONAL CHAMBER OF COMMERCE. ISSUER: By: AUTHORIZED SIGNATURE Its: EXHIBIT “A” TO LETTER OF CREDIT SIGHT DRAFT Sight Draft $ At sight, pay to the order of [Name of Beneficiary to be inserted], the amount of USD $ ( and 00/100ths U.S. Dollars). Drawn under [Name of Issuer to be inserted] Standby Letter of Credit No. . Dated: , 20 [Name of Beneficiary to be inserted] By: Its Authorized Representative and [Title or Other Official Capacity to be inserted] To: [Name and Address of Issuer to be inserted] EXHIBIT “B” TO LETTER OF CREDIT FORM OF TRANSFER REQUEST CREDIT NO: CURRENT BENEFICIARY: APPLICANT:: TO: [NAME OF ISSUING BANK] The undersigned, as the current “Beneficiary” of the above referenced Letter of Credit, hereby requests that you reissue the Letter of Credit in favor of the transferee named below [INSERT TRANSFEREE NAME AND ADDRESS BELOW]: DATED: [NAME OF BENEFICIARY] By Name Title [NOTARY ACKNOWLEDGMENT] [TO BE SIGNED BY A PERSON PURPORTING TO BE AN AUTHORIZED REPRESENTATIVE OF THE BENEFICIARY AND INDICATING THEIR TITLE OR OTHER OFFICIAL CAPACITY, AND ACKNOWLEDGED BY A NOTARY PUBLIC.] EXHIBIT “N” LABORATORY USE RIDER In the event Tenant uses all or any portion of the Premises for a laboratory for research and development of medicine and drugs, and/or any ancillary uses related thereto as described in Section 4 of this Lease above, then Tenant shall at all times thereafter comply with the terms of this Laboratory Use Rider.